Healthcare is Different. Real Different.

Modern Healthcare has released its list of the top 100 most influential people in healthcare.  It's an annual list.

It's worth your time to scan the whole list.  As you do, don't overlook the fact that not one of the top 25 is a physician.

Not one.

Plenty of politicians, lawyers, MBA's, and accountants. Couple of nurses. A phys Ed. Major. Not one physician.

President Obama is #1. (Modern  Healthcare doesn't really say whether it distinguished between positive or negative "influence" assembling their list.). You'll also notice Loretta Lynch, Paul Ryan, John Roberts, even Bernie Sanders.  But not one physician.

Can anyone imagine the automotive industry's 25 most influential people not including even one senior mechanical engineer?  Or the 25 most influential construction executives not including even one experienced building contractor?  Or the 25 most influential American military figures not including even one general or flag rank officer?

But it's all good, because, you know, "Healthcare is different".

Bad News for Obamacare in Ohio

Ohio’s individual health insurance market is failing. In less than 12 months we have seen HealthSpan, InHealth, United Health Care, and Aetna exit the Obamacare Marketplace. Another insurer local to Northwest Ohio, Paramount, is reducing its footprint for their HMO products. Now comes official word that Medical Mutual will be eliminating all PPO products and will no longer participate in 65% of the state.

For people living in 19 counties choice is no longer an option. Anthem will be the sole insurer they can purchase a plan from. In 28 counties there will only be two insurance carriers to choose from – Anthem and one other. These 47 counties make up more than half the state of Ohio. This is a far cry from 2016 when Ohio boasted of having at least four insurers in every county.

MMO’s PPO plan elimination is even more important for those it will still serve. Their largest number of insured members were enrolled in a PPO product. The PPO network was very robust and allowed members to utilize several hospital systems and specialists. That choice is gone. Going in to 2017 the remaining insurers all utilize narrow networks. For consumers in some counties this means that they cannot have services from the local community hospital that serves them. For others it means that they will have to find new cardiologists or oncologists. This will be especially problematic for outlying communities.

The bad news doesn’t stop there. In addition to less choice, rate increases are estimated to rise nearly 13%. As the only statewide insurer, Anthem is seeking a 9.9% average increase for their plans. Overall this is less than the average but it is relevant to point out that they already had some of the highest rates in the state. Other insurers such as Medicaid managed care providers Caresource and Premier are seeking increases of 13.5% and 39% respectively. Now they will be taking on the additional risk coming from insurers who are losing their shorts in the Obamacare marketplace.

Higher rates, less insurers, and fewer providers. Exactly the opposite of what Obamacare promised.

Breaking Tar Heel State BX News [Updated]

As if North Carolina Blue Cross hasn't put itself in enough hot water, FoIB Jeff M tips us that the carrier has decided it doesn't really need (want?) a lot of new business:

Effective for the 2017 plan year (Open Enrollment '16), NC BX is paying $0 commission on new business coming from other carriers, $0 commission on BX re-writes, and a whopping 1% for newly insured folks.

More on this as it develops.

Oh! David Williams has an excellent counterpoint to conventional wisdom on the current EpiPen kerfluffle.

STOLI: Lagniappe

We first blogged on "Dead Peasant" life insurance over 10 years ago:

"Stranger Owned Life Insurance (SOLI) is part of the “premium financing” phenomenon."

The concept certainly had its drawbacks: for one thing, it created (or could potentially create) a "moral hazard," tempting impatient beneficiaries with no familial or other personal connection to the insured.

But it had its uses, too: it enabled businesses to recover financially from the loss of key (or other) personnel. And there was this:

"Florida Atlantic University ... pays the premiums on life insurance policies for select boosters, who then name the university as beneficiary. The booster eventually shuffles off this mortal coil, leaving behind an endowed chair"

So, win-win.

But eventually the tide changed, and STOLI plans were outlawed. Which would have been the end of it, except for a nagging question: if all these plans are forced to go away through no fault of those who bought them, who gets all those premium dollars? On the one hand, the carrier assumed the risk in good faith, and (presumably) paid out one or more claims over the years. On the other, the folks who bought them certainly believed that the plans would eventually pay out, and didn't cancel them along the way.

On the gripping hand, "[t]wo federal appellate courts have affirmed, on different grounds, the cancellation of large life insurance policies ... permitting the issuing insurers to retain the premium paid for the policies."

Which is good news for the carriers, which had the use of the money for years, and now get to keep it completely risk free.

One wonders if there are any tax consequences to this.

Contrary to popular myth: The EpiPen story

Over at The Grey lady, Aaron Carroll (professor of pediatrics at Indiana University School of Medicine) has a helpful explication of how the current EpiPen kerfluffle came about. He outlines the history of how the EpiPen came into being, and its subsequent history. He notes that, although the active ingrecdient is relatively inexpensive, it's also "inherently unstable. Research shows that it degrades pretty quickly over time, and it’s recommended that EpiPens be replaced every year."

Which makes sense, and I'm generally in favor of keeping med's up-to-date, and of market forces to keep the price of said med's within reach. But as we saw with the Daraprim controversy, sometimes bad actors cause market distortions, and heartache.

We'll come back to that.

But first, it's important to note that Prof Carroll goes to great pains to lay out the timeline, and regulatory issues, which have ultimately lead to a relatively inexpensive - but indispensable - treatment fast becoming out of reach for everyday folks. It's a tale of government recalcitrance and provider avarice, but mostly government recalcitrance:

"[I]n 2010, federal guidelines changed to recommend that two EpiPens be sold in a package instead of one ... In 2013, the government went further. It passed a law that gave funding preferences for asthma treatment grants to states that maintained an emergency supply of EpiPens. As the near sole supplier of the devices, Mylan stood to make even more money."

Which is fine, but then the good Professor concludes:

"EpiPens are a perfect example of a health care nightmare. They’re also just a typical example of the dysfunction of the American health care system."

No, sir, it is most decidedly not that.

And how does your humble correspondent know this?

Well, when one digs a bit deeper, which Prof Carroll apparently did not do, one finds this little gem:

"If lawmakers follow the usual script, Bresch could get called up to Capitol Hill next month to explain her company’s justification for raising the price on the life-saving allergy shot. But that could be awkward, since she’s the daughter of Democratic Senator Joe Manchin of West Virginia."

So what Prof Carroll characterizes as an indictment of the (admittedly dysfunctional) health care system is really just a very simple, sordid example of rent-seeking, enabled by the powerful relative of the manufacturer's CEO.

Case closed.

More "Interesting" UL News

A few months ago we blogged on a lawsuit against TransAmerica Life regarding the cost of insurance (COI) in their Universal Life products. At the time, we noted that this was most likely an uphill battle, seeing as how every single UL contract specifically says that they can charge the maximum COI as stated in the policy.

Now, perhaps inspired by the TA litigation, policyholders of other carriers are also suing their insurers, citing much the same legal reasoning. Obviously, I'm sympathetic to their plight, but I'm also in favor of the rule of law, and contractual law in this case specifically.

The problem is this little phrase:

"[O]n top of the contract’s guaranteed maximum rates, express or implied contractual limitations serve as a check on discretion, prohibiting the insurer from considering factors other than mortality experience."

That is, carriers are constrained from using poor investment results as justification for increasing internal insurance costs. And I tend to agree with this: certainly, carriers should look to their portfolio's performance when deciding how much interest to credit, but this has nothing to do with mortality costs (that is, how many of their insureds died the previous year). It seems to me that if interest rates were driving mortality rates, we've got much bigger problems going on here.

No jumping out of windows, please.

Blogging for The Pelican State

Longtime readers may recall the extraordinary outpouring of support for those hit by Katrina; we were glad to help raise much needed funds for those most deeply affected.

Flash forward 11 years, and folks in Louisiana are once again facing devastating losses. I reached out to my old Cavalcade of Risk roster to see if any of those fine folks could help with an updated version of that 2005 project.

Thankfully, 'Ironman' came through, and has set up a page with all kinds of ways to help out:

"We've also selected a handful of charitable organizations that are focused on providing disaster relief across Acadiana, which are tied to national organizations that have been ranked highly by Consumer Reports and the Christian Science Monitor for their effectiveness in putting donated funds into real relief efforts."

This is just an outstanding response, and I would urge IB readers to head on over - Thank you, Ironman!